Originally published in Wireless NOW! (An Ericsson Newsletter) – May 1997
Mention Honolulu and you evoke images of Waikiki Beach, shady palm trees and hula dancers. But when it comes to cellular, the island of Oahu is strictly business.
Newcomer Hawaiian Wireless is involved in a turf battle over Hawaii’s 300,000 cellular customers. Weapons of choice include customer service and digital D-AMPS (IS-136) technology in the specialized mobile radio (SMR) spectrum. Hawaiian Wireless is the “new kid on the block” in a highly competitive market that already has four well-seated cellular providers on the island of Oahu, the most densely populated island in the state of Hawaii.
Even though the company has only been in the market for about a year, it has already attracted attention from the island’s 300,000 or so cellular customers.
Top Cellular Market
“Customer service, coverage and price are the winning ingredients,” vouches David Hafner, vice-president and general manager of Hawaiian Wireless.
Hawaii is one of the top cellular markets in the United States. It has a market penetration of 30 percent, which is one and-a-half times the US average and comparable with some of the Scandinavian countries. Hafner plans to capture 20 percent of this market. But he points out that he does not take a shotgun approach when marketing the company.
“We don’t want to be the mass-market carrier. Our rate plan doesn’t work for people who keep their phones in the glove compartments of their cars,” noted Hafner.
Specialized Mobile Radio
Hawaiian Wireless has targeted a specific segment of the marketplace: about 4,000 companies on Oahu with a total of 85,000 employees,
Hawaiian Wireless is an Ericsson launch customer using a proven technology with a new twist. Hawaiian Wireless operates the first fully digital cellular system in the SMR frequency band. The network is based on D-AMPS (IS-136) technology supplied by Ericsson.
“We operate with a smaller spectrum than other operators do. The challenge was to figure out how we could exploit the limited amount of spectrum as competitively as possible,” said Hafner.
Hawaiian Wireless decided to target business professionals who make a lot of short calls, thus increasing the available number of lines per megahertz.
“We noted that most calls ranged between 1 and 3 minutes,” said Hafner. Nicknamed the “l-2-3 Revolution,” Hawaiian Wireless offers unlimited incoming and outgoing airtime as long as customers keep their phone calls under a certain length.
“It benefits us to give clients an incentive to make their calls quickly. It frees up available space on our network,” Hafner pointed out. “We offer all the bells and whistles of a PCS system with a twist. Extended services such as caller ID and voice messaging are free of charge to our customers.”
The plan has attracted positive comments from both clients and insiders in the cellular industry.
“Our customers are taking advantage of these rates. The billing information shows that our customers are really using the program. The average phone call lasts 2 to 2.21 minutes,” noted Hafner
Specialized mobile radio operates on lower frequencies than those normally assigned to cellular networks. This frequency band has traditionally been allocated on a per-channel basis to private radio networks. In reality, SMR frequencies open up a third cellular network, creating a completely new market. Using SMR, Hawaiian Wireless gained access to much-needed frequencies without paying a premium for a license.
“There are different costs involved in setting up the net work. You have to factor in the cost of buying SMR frequencies and the cost of swapping frequencies with other operators to get a better distribution of the spectrum,” contends Peter McNiff, technical director at Hawaiian Wireless, and a former Ericsson and McCaw Communications employee.
Before the parent company, Atlantic Cellular, could start using the new frequency band it had to petition the Federal Communications Commission (FCC) to open up the SMR frequencies to cellular equipment. Atlantic Cellular was successful. With a thumbs up from the FCC, CEO Charles Townsend approached leading manufacturers about modifying existing digital equipment for the new spectrum.
Ericsson accepted the challenge and proposed retuning its digital CMS 8800 cellular equipment so it could be used with the SMR frequencies. The modification and retuning of existing equipment to a lower frequency is called down-banded cellular or DBC.
In March 1996, Atlantic Cellular decided to take advantage of the new spectrum and form Hawaiian Wireless, Inc.
A handset that can access both the 800 MHz and 850 MHz band is the main technological achievement in this equation.
Two Cell Sites
Hawaiian Wireless is using the frequency ranges 806-822 MHz and 850-885 MHz to send and receive calls.
“Since the 800 MHz signal is at the lower end of the radio frequency spectrum it has better penetration than an 1800 MHz signal,” said McNiff. This is an important consideration that allows Hawaiian Wireless to get by with a smaller number of cell sites compared with PCS operators working in the 1800 MHz band.
“Our competitors use four or five cell sites to cover the down town Honolulu area, but we can get by with only two,” says Peter McNiff.
The business climate in the state of Hawaii has been flat for the last couple of years. The Japanese rush to buy into Hawaii’s booming tourist business has subsided since the Japanese market bottomed out.
Airlines are also feeling the strain of the constant demand for cheaper fares and frequent flyer miles being used to travel to Hawaii. Revenue per passenger is dwindling and many carriers are cutting the number of flights to Hawaii.
That puts Oahu on a slim diet of available money, and competition is fierce among the cellular operators to attract business.
“There are ways to beat the competition. You have to surpass yourself regarding customer service, for instance. Don’ t expect to do business the ‘Hawaiian way’ by closing shop at five o’clock and hoping your clients will wait until tomorrow with their problems,” said McNiff.